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K.G. Kumar

Until not very long ago, a company's worth and standing pivoted almost exclusively around its financial performance. In much of corporate India, this is still so, as companies seek to merely maximise profits.

EVEN as Kochi was being mesmerised by the celebrations of the 50th birthday of Mata Amritanandamayi, described by some Western news agencies as "the hugging saint of India," her message of love, peace and universal harmony was echoed at a special CEO Summit organised as part of the spiritual jamboree.

The essential truisms of a divine and transcendental undertaking may not have sunk through to the bottom lines of several of the NRIs and CEOs who attended the summit. After all, how would they translate all this metaphysical gobbledygook into figures that would prop up the balance sheets of their companies and bring cheer into the hearts of their shareholders?

Such fears are, if anything, misguided. Spirituality - in the sense of doing what is good for the majority of a constituency - does happily coexist with profits. In fact, increasingly, stakeholders - a far larger constituency than the immediate owners of a company's equity - are demanding that companies display the human side of their business activities.

This notion of `corporate social responsibility' (CSR) aligns business operations with social values. CSR has been defined by the Prince of Wales Business Leaders Forum as "open and transparent business practices that are based upon ethical values and respect for employees, communities and the environment - (and) designed to deliver sustainable value to society at large, as well as to shareholders."

CSR attempts to integrate the interests of stakeholders - all those affected by a company's conduct, that is, primarily investors, consumers, employees and the communities in which they operate - into the company's business policies and actions. It focuses on the social, environmental and financial success of a company - the so-called `triple bottom line' or `sustainable' approach - so that a corporate entity can have positive impacts on society while achieving business success.

Until not very long ago, a company's worth and standing pivoted almost exclusively around its financial performance. In much of corporate India, this is still so, as companies seek to merely maximise profits and shore up their share prices.

However, in the rest of the world, particularly in the industrialised countries, a new and growing pressure from investors, consumers and employees is forcing management to consider social and environmental criteria in the way a company carries out its business. Stakeholders now vociferously demand that the company they support uses business practices that have a range of positive impacts on society.

Today, financial success is no longer the sole measure by which corporations are judged by their stakeholders. Companies are now expected to perform well in non-financial areas such as human rights, business ethics, environmental policies, corporate contributions, community development, corporate governance and workplace matters.

Not only that, companies are being held accountable for their actions and their impact, whether it is on local economic development concerns or on international human rights policies. CSR is founded on two pillars - accountability and transparency. Companies are now expected to be more transparent in disclosing and communicating their policies and practices.

To be considered a good corporate citizen, a company must thus demonstrate a commitment to its stakeholders through socially responsible business practices and transparent operations. The saga of Enron has shown the enormous costs of disregarding ethical standards - standards beyond those that are legally mandatory - in corporate accounting and financial management.

Thus, even though she may not have delivered a moral injunction to the corporate leaders at the Kochi CEO Summit, Mata Amritanandamayi would have certainly hugged the message of corporate social responsibility. So should Indian business houses.

The writer can be contacted at kg@tug.org.in

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